For months, the Florida Attorney General and the attorneys general of all 49 other states have been in negotiations with the biggest mortgage banks over penalties for the banks' shoddy and fraudulent foreclosure practices, exemplified by the "robo-signing" scandal.

Not long ago, rumors were circulating that some states were thinking of opting out of an overall settlement, over concerns that the terms of the settlement might protect the banks from prosecution to a degree far exceeding the penalties that would be paid by the mortgage banks in exchange.

Now, it has emerged that the banks are anxious to keep all of the states, especially the biggest ones, inside the settlement and not on the outside of it. New York was an early dissenter, and now California's attorney general is under political pressure to opt out of a comprehensive deal on the foreclosure issues.

Fort Lauderdale foreclosure defense attorneys can see why the banks would want to keep the biggest states in the deal. If the biggest states, with hundreds of thousands of foreclosure cases, stay out of the deal, the banks would very likely be subject to legal action from state authorities. If a deal with the states still leaves the banks vulnerable to thousands of court cases and millions or billions of dollars in additional penalties, they may decide that a settlement is not worth their while after all.

If the settlement collapses, all the parties would be back to square one: initiating individual investigations and prosecutions in every state, with the banks defending themselves in millions of civil and criminal actions.

Source: Reuters "U.S. banks woo California in mortgage settlement" Sept. 29, 2011